The Impact of the Great Recession on School District Finances: Evidence from New York

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in AbstractDespite education's fundamental role in human capital formation and growth, there is no research that examines the effect of the Great Recession (or any other recession) on schools. Our paper begins to fill this gap. Exploiting detailed data on school finance indicators and an analysis of trend shifts, we examine how the Great Recession affected school funding in New York State. While we find no evidence of effects on either total revenue or expenditure, there were important compositional changes to both. There is strong evidence of substitution of funds on the revenue side-the infusion of funds from the federal stimulus occurred simultaneously with statistically and economically significant cuts in state and local financing, especially the former. On the expenditure side, instructional expenditure was maintained, while other categories such as transportation, student activities, and utilities suffered. Important heterogeneities in experiences are also observed by poverty level, metropolitan area, school district size, and urban status. Affluent districts were hurt the most; the New York City metro area, especially Nassau County, sustained the largest losses in terms of both revenue and expenditure. Our findings promise to facilitate an understanding of how recessions affect schools and of the role policy can play in mitigating the consequences.

The Effect of the 2008 Recession on Gifted Education Funding Across the State of Texas

“…In an analysis presented to the Federal Reserve Bank of New York, Chakrabarti and Setren (2011) examined the effect of the Great Recession on New York State public schools. In contrast to the finding by Freelon et al (2012), Chakrabarti and Setren found that more affluent schools were affected by the recession to a greater extent than their less affluent peer districts.…”

“…Though scholars have examined the macro effects of the recession on school districts (Chakrabarti & Setren, 2011;Dupor & Mehkari, 2015;Leachman & Mai, 2014), few scholars in gifted education have examined the numerous specifics of how those effects manifested in district-level funding choices. The purpose of this study was to examine the effect of the financial crisis on the budget for gifted education in Texas public school districts.…”

“…Kettler et al (2015) provided evidence that the locale of a district influences how it allocates resources in Texas. Freelon et al (2012) and Chakrabarti and Setren (2011) came to opposing conclusions in their examination of the influence of the Great Recession on different locales. The purpose of this paper is to extend the findings of Kettler et al (2015) and provide further evidence to understand the opposing findings of Freelon et al and Chakrabarti and Setren. This research provides insight into the factors affecting school districts' financial planning under recession conditions coupled with a push for greater accountability through NCLB.…”

“…Texas received funding from the U.S. federal government following the Great Recession. The reality is that those emergency funds did not likely go toward gifted programs and instead went to overlays and funding personnel (Chakrabarti & Setren, 2011). As a result, in spite of the Great Recession, the general trend of decreased funding for gifted education following the inception of No Child Left Behind has continued unabated (Hodges, in press).…”

U.S. High School Girls Sports and Booster Clubs

“…However, responses to the drop in revenues vary by state and school district. Using school district-level data, Chakrabarti and Setren (2011) found that although instructional expenditure was maintained since 2004-05, other categories such as transportation, student activities -including athletics -and utilities suffered.…”